Only in Amarraca? Featured

9:48am EDT July 22, 2002

As fast as business moves nowadays, in six months or so most people won’t even remember the Food Gallery. The little chain that carved out a limited but loyal following for its stores over two decades will sell off its locations, it appears, to Giant Eagle and SuperValu.

In the food business, big chains like Giant Eagle and Shop ’n’ Save and other “Big Box” retailers with the resources to invest in technology and powerful buying leverage are gobbling up the market. Oddly enough, they’re doing it by employing some of the strategies that brothers Jerry Meyers and Harvey Potashman employed to build their Food Gallery chain into a successful business.

About 10 years ago, I did a story about the local pioneers of the upscale supermarket, focusing on stores like the North Hills’ Amarraca and the Food Gallery. In the late 1970s, they envisioned the supermarket of the future, where two-income families and busy professionals would be willing to pay extra for prepared foods, fancy grocery items and a little more personalized service. That was a departure from what the big chains had come to offer during the gloomy later years of that decade.

The brothers created a small but recognizable buzz in the business. They added touches like carpeted floors, bakeries and, for the times, dazzling service counters for meat and poultry. To cash in on the dining out trend, Amarraca built a restaurant that was attached to the supermarket.

Bill Marra, one of the owners of Amarraca, bragged to me that Giant Eagle never dared offer a $5 apple pie until he had shown that it could work in Amarraca. Shoppers could pull up to the door under a covered canopy and have an attendant load their groceries into their cars. These stores, it seemed, were onto something.

Meyers and Potashman were, and are, smart business people, but the economics of the food business work against the Food Gallery and other small operators. When you’re small, it’s tough to compete for the limited supply of prime locations. When you buy millions of gallons of milk or loaves of bread every week, saving even a penny off the cost of each unit has a dramatic effect on your bottom line. When you’re a small operator, you’re not going to get as good a break as the big guy.

Develop a shopping card, and you can spread those costs out over a larger customer base and gather valuable marketing information along the way when you’re big. Come up with a new merchandising program for an in-store pizza or other prepared foods, and you create brand awareness for 100 or more stores. You can experiment with ideas on a small scale with a relatively modest investment before you launch them in most or all of your locations.

The little guy, on the other hand, has to take a little more careful aim when he tries something new because he’s putting a bigger share of his resources on the line.

I spent more than a couple of decades working in the food business. I’ll tell you that Giant Eagle and Shop ‘n’ Save do a great job of operating stores in a very difficult business, and the marketplace, it appears, is rewarding their shrewdness.

I’m a little skeptical, however, about how healthy it is for the marketplace to push out the small operators. The best companies try hard to be innovators, but as much as they try to differentiate themselves, the big retailers in every category often exhibit a dull sameness in spite of their conscious efforts to offer excitement to the customer.

And large organizations often rely too much on the proven rather than striking out on a bold new course. As the consolidations continue, so too will the blandness, I’m afraid.

Without operators like the Food Gallery, which could stir up some excitement with a little carpeting on the floor or an expensive carryout entree, who’s going to show the market where to go?

Ray Marano, upscale grocery sage, is associate editor of SBN magazine. Reach him at rmarano@sbnnet.com.